**United
      States**


**Securities
      and Exchange Commission**


**Washington,
      DC 20549**





**FORM
      10-QSB**





QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934








For
      the
      quarterly period ended **March
      31, 2007**





Commission
      File Number **000-28789**








**Falcon
      Ridge Development Inc.**





(Exact
      name of registrant as specified in its charter)








**Nevada**
            
            **84-1461919**(State
                or other jurisdiction of incorporation)
            
            (IRS
                Employer File Number)**5111
                Juan Tabo Boulevard N.E. Albuquerque, New
                Mexico**
            
            **87111**(Address
                of principal executive offices)
            
            (zip
                code)




**(866)
      302-2248**


(Registrant's
      telephone number, including area code)








Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports); and (2) has been subject
      to such filing requirements for the past 90 days **Yes
      [X]** No []








Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)


Yes
      [
      ] **No
      [X]**








State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 14,616,233 **** shares
      of
      common stock.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] **No
      [X]**











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          1
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**TABLE
      OF CONTENTS**







**Page**PART
                I- FINANCIAL INFORMATIONItem
                1. Financial Statements.
            
            3Item
                2. Management's Discussion and Analysis or Plan of
                Operation.
            
            15Item
                3. Controls and Procedures
            
            18PART
                II - OTHER INFORMATIONItem
                1. Legal Proceedings.
            
            18Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            18Item
                3. Defaults Upon Senior Securities.
            
            18Item
                4. Submission of Matters to a Vote of Security Holders.
            
            18Item
                5. Other Information.
            
            18Item
                6. Exhibits and Reports on Form 8-K.
            
            19Signatures
            
            20




**Index
        to Consolidated Financial Statements**
 **(Unaudited)**
 
 **Page**Consolidated
                  Balance Sheet (unaudited) at March 31, 2007
              3Consolidated
                  Statements of Operations (unaudited), for the three months and
                  six
                  monthsended
                  March 31, 2007 and 2006
              4Consolidated
                  Statements of Cash Flows (unaudited) , for the six months ended
                  March 31,
                  2007 and 2006
              5Notes
                  to Consolidated Financial Statements
              6


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            2
            -*




**FALCON
      RIDGE DEVELOPMENT, INC.**


**Consolidated
      Balance Sheet**


**(Unaudited)**








**Assets**Real
                estate held for development and sale
            
            $
            2,987,369Fixed
                assets, net of accumulated depreciation
            
            
            33,228Cash
            
            
            345Other
                assets
            
            
            220Total
                assets
            
            $
            3,021,162**Liabilities
                and Shareholders' Equity****Liabilities**Indebtedness
                to related parties
            
            $
            1,123,928Notes
                payable
            
            
            560,483Accounts
                payable
            
            
            443,849Retainage
                payable
            
            
            90,000Accrued
                expenses
            
            
            71,724Preferred
                shares subject to mandatory redemption
            
            
            485,0002,774,984**Shareholders'
                Equity**Preferred
                stock,Class A .0001 par value,400,000
                shares authorized, 160,000 shares issued andoutstanding
            
            
            400,000Common
                stock, $0.001 par value, 50,000,000 sharesauthorized,
                14,616,233 shares issued andoutstanding
            
            
            763,117Additional
                paid-in capital
            
            
            1,268,790Accumulated
                deficit
            
            
            (2,185,729
            )246,178Total
                Liabilities and Shareholders' Equity
            
            $
            3,021,162





See
        accompanying notes to consolidated financial statements




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          3
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**




**Consolidated
      Statement of Operations**


**(Unaudited)**





**Three
                Months Ended**
            
            **Six
                Months Ended****March
                31**
            
            **March
                31****2007**
            
            **2006**
            
            **2007**
            
            **2006**Lot
                sales:Net
                sales
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            643,969Costs
                of sales
            
            
            —
            
            
            —
            
            
            —
            
            
            (689,730
            )Gross
                profit (loss)
            
            
            —
            
            
            —
            
            
            —
            
            
            (45,761
            )Compensation
                paid in stock
            
            
            369,800
            
            
            
            
            
            380,225
            
            
            2,300Selling,
                general and administrative expenses
            
            
            175,171
            
            
            (92,778
            )
            
            318,680
            
            
            350,830Loss
                (income) before provision for income taxes
            
            
            (544,971
            )
            
            (92,778
            )
            
            (698,905
            )
            
            (353,130
            )Income
                taxes
            
            
            —
            
            
            —
            
            
            —
            
            
            —Loss
            
            $
            (544,971
            )
            $
            (92,778
            )
            $
            (698,905
            )
            $
            (353,130
            )Loss
                per share
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Weighted
                average number of shares outstanding............
            
            
            14,533,137
            
            
            3,761,233
            
            
            11,310,079
            
            
            3,761,233





See
        accompanying notes to consolidated financial statements


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          4
          -*








**FALCON
      RIDGE DEVELOPMENT, INC.**




**Consolidated
        Statements of Cash Flows**
 **(Unaudited)**








**Period
                Ended****March
                31****2007**
            
            **2006**Cash
                flows from operating activities:Net
                income/loss
            
            $
            (698,905
            )
            $
            (353,130
            )Adjustments
                to reconcile net loss to net cashused
                by operating activities:Depreciation
            
            
            3,154
            
            
            1,444Changes
                in operating assets and liabilities,excluding
                effects of business combinations:Land
                development costs
            
            
            (143,929
            )
            
            (305,053
            )Stock
                based compensation
            
            
            380,225
            
            
            2,300Prepaid
                expenses
            
            
            —
            
            
            (2,500
            )Retainage
                payable
            
            
            —
            
            
            (106,962
            )Accrued
                liabilities
            
            
            —
            
            
            61,450Accounts
                payable
            
            
            123,588
            
            
            (20,171
            )Deferred
                revenue
            
            
            —
            
            
            (196,500
            )Net
                cash (used in) provided byoperating
                activities
            
            
            (335,867
            )
            
            (919,122
            )Cash
                flows from investing activities:Acquisition
                of fixed assets
            
            
            —
            
            
            (32,349
            )Net
                cash used ininvesting
                activities
            
            
            —
            
            
            (32,349
            )Cash
                flows from financing activities:Decrease
                in related party indebtedness
            
            
            142,286
            
            
            729,330Repayments
                of notes payable
            
            
            (9,828
            )
            
            (90,868
            )Increase
                in other assets
            
            
            —
            
            
            (220
            )Proceeds
                from note payable
            
            
            200,000
            
            
            —Net
                cash used infinancing
                activities
            
            
            332,458
            
            
            638,242Net
                change in cash
            
            
            (3,409
            )
            
            (313,229
            )Cash:Beginning
                of period
            
            
            3,754
            
            
            323,505End
                period
            
            $
            345
            
            $
            10,276Supplemental
                disclosure of cash flow information:Cash
                paid during the period for:Income
                taxes
            
            $
            —
            
            $
            —Interest
            
            $
            12,035
            
            $
            4,278






See
        accompanying notes to consolidated financial statements


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          5
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**





(1)
      Summary of Significant Accounting Policies





Organization,
      Shell Merger and Principles of Consolidation





Organization





Falcon
      Ridge Development, Inc. ("FRDI" or the "Company") is engaged in the real estate
      industry and acquires tracts of raw land and develops them into residential
      lots
      for sale to homebuilders. In addition, FRDI plans to expand its operations
      into
      the homebuilding business. These operations are predominantly located in the
      City of Rio Rancho, New Mexico and Belen, New Mexico. Since inception, the
      Company has developed one property known as Sierra Norte.





Going
      Concern





The
      Company experienced significant operating losses during the three and six months
      ended March 31, 2007 and 2006, of $544,971, $92,778 and $698,905 and $353,130
      respectively. The Company has a working capital deficit and implementation
      of
      its business plan is dependent upon its ability to raise additional capital.
      These matters raise substantial doubt about the Company’s ability to continue as
      a going concern. Management believes that it will be successful in raising
      additional capital and that it has assets available to securitize debt should
      the Company look to borrow. The accompanying financial statements do not include
      any adjustments relating to the recoverability and classification of the
      recorded asset amounts or the amounts and classification of liabilities that
      might be necessary should the Company be unable to continue in
      existence.








Shell
      Merger





On
      May
      20, 2005, Sierra Norte LLC ("SNLLC") exchanged certificates representing 100
      percent of its equity securities for 100,000,000 shares of the common stock
      of
      Pocketspec Technologies, Inc. (PTI), a public shell company. The acquisition
      has
      been treated as a recapitalization of SNLLC, a New Mexico limited liability
      company, with PTI the surviving legal entity. Since PTI had, prior to the
      merger, minimal assets, (consisting of cash) and no operations, the
      recapitalization has been accounted for as the sale of 37,265,372 shares of
      common stock for the net assets of PTI. After the closing of the acquisition,
      there were 137,265,372 shares of common stock of the Company issued and
      outstanding. PTI was incorporated under the laws of Colorado in 1998. In June
      2005, PTI changed its domicile to Nevada and its name to Falcon Ridge
      Development Inc.





SNLLC
      was
      deemed to be the acquirer (for accounting purposes) in the reverse acquisition
      and, consequently, the assets and liabilities and historical operations that
      are
      reflected in the accompanying financial statements are those of SNLLC and are
      recorded at the historical cost basis of SNLLC.





In
      connection with the merger, PTI sold to a group of its shareholders, PTI's
      color
      comparison devices business in exchange for an indemnification from liabilities
      by these investors. These shareholders assumed the color comparison devices
      business including its liabilities. The sale was consummated between related
      parties. Accordingly, the sale was booked as a capital transaction and no gain
      or loss on the transaction was recorded.





Since
      incorporation in 1998, PTI has conducted three businesses. Originally PTI was
      in
      the retail arts and crafts industry. PTI then transitioned into the real estate
      development business, where it acquired and developed real estate properties
      for
      its own account, primarily in Colorado. Finally, PTI became a technology
      company. In 1999, PTI filed a registration statement on Form 10-SB with the
      U.S.
      Securities and Exchange Commission to become a reporting company under Section
      12G of the Securities and Exchange Act of 1934.





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          6
          -*


**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**











Principles
      of Consolidation





The
      consolidated financial statements include the accounts of Falcon Ridge
      Development, Inc. and its wholly owned subsidiaries SNLLC and Spanish Trails
      LLC
      (STLLC) (together, the "Company"). Intercompany transactions and balances have
      been eliminated in the consolidation.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, and disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.








Revenue
      Recognition on Sales of Real Estate





The
      profit on sales of real estate is accounted for in accordance with the
      provisions of SFAS No. 66, "Accounting for Sales of Real Estate." The Company
      recognizes revenue from the sale of real estate at the time the sale is closed
      and the title is transferred from the Company to the buyer.





Cash
      and Cash Equivalents





The
      Company considers all highly liquid securities with original maturities of
      three
      months or less when acquired to be cash equivalents. The Company had no cash
      equivalents at March 31, 2007 and 2006.





Real
      Estate Held for Sale


The
      carrying value of land and development includes the initial acquisition costs
      of
      land, improvements thereto, and other costs incidental to the acquisition or
      development of land. These costs are allocated to properties on a relative
      sales
      value basis and are charged to costs of sales as specific properties are sold.
      Due to the nature of the business, land and development costs have been
      classified as an operating activity on the consolidated statement of cash flows.





Impact
      credits received from the negotiated settlement with the City of Rio Rancho
      are
      offset against land development costs.





The
      company reviews the fair value less costs to sell of land under development
      at
      the end of each reporting cycle and where the carrying value of the asset is
      not
      recoverable and exceeds its fair value an impairment loss will be
      recognized.





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          7
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**





Interest





The
      Company capitalizes interest costs to real estate held for resale during
      development and construction. Capitalized interest is charged to cost of sales
      as the related lots are delivered to the buyer.





Fixed
      Assets and Depreciation





Fixed
      assets are recorded at cost. Expenditures that extend the useful lives of assets
      are capitalized. Repairs, maintenance and renewals that do not extend the useful
      lives of the assets are expensed as incurred. Depreciation is provided on the
      straight-line method over the following estimated useful lives: software,
      5


years;
      equipment, 5 years.








Earnings
      (loss) per Common Share





Basic
      net
      income per share is computed by dividing the net income available to common
      shareholders (the numerator) for the period by the weighted average number
      of
      common shares outstanding (the denominator) during the period. The computation
      of diluted earnings is similar to basic earnings per share, except that the
      denominator is increased to include the number of additional common shares
      that
      would have been outstanding if potentially dilutive common shares had been
      issued.





At
      March
      31, 2007, there was no variance between basic and diluted loss per share as
      the
      convertible preferred stock outstanding, if converted, would be
      anti-dilutive.





Impairment
      or Disposal of Long-Lived Assets





The
      Company evaluates real estate projects and other long-lived assets on an
      individual basis for impairment whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be recoverable in
      accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
      Long-Lived Assets" and SFAS 67 “Accounting for Costs and Initial Rental
      Operations of Real Estate Projects.” An asset is considered impaired if its
      carrying amount exceeds the future net cash flow the asset is expected to
      generate or its net realizable value. If an asset is considered to be impaired,
      the impairment to be recognized is measured by the amount by which the carrying
      amount of the asset exceeds its fair market value. We assess the recoverability
      of our real estate projects, long-lived and intangible assets by determining
      whether the unamortized balances can be recovered through undiscounted future
      net cash flows of the related assets. The amount of impairment, if any, is
      measured based on projected discounted future net cash flows. When impairment
      exists the carrying value of the asset will be reduced by an allowance for
      the
      amount of the impairment. There is
      no impairment in 2007 or 2006.





Advertising
      Expenses





The
      Company expenses advertising expenses as incurred. Advertising expense for
      the
      three and six months ended March 31, 2007 and 2006 was $ 1,041, $590 and $4,052
      and $3,086 respectively.







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          8
          -*




**FALCON
      RIDGE DEVELOPMENT, INC.**


**Notes
      to Consolidated Financial Statements**


**(Unaudited)**





Stock-based
      Compensation





The
      Company adopted Statement of Financial Accounting Standards No. 123 (revised
      2004), Share-Based Payment (SFAS 123R), effective January 1, 2006. SFAS 123R
      requires the recognition of the fair value of stock-based compensation in net
      income. The Company has elected the modified prospective transition method
      for
      adopting SFAS 123R. Under this method, the provisions of SFAS 123R apply to
      all
      awards granted or modified after the date of adoption. In addition, the
      unrecognized expense of awards not yet vested at the date of adoption,
      determined under the original provisions of SFAS 123, shall be recognized in
      net
      income in the periods after the date of adoption. The Company had no unvested
      awards at March 31, 2007 and 2006 respectively.





Income
      Taxes





Income
      taxes are accounted for using the asset and liability method. Under this method,
      deferred income tax assets and liabilities are recognized for the future tax
      consequences attributable to temporary differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax bases. Deferred income tax assets and liabilities are measured
      using enacted tax rates expected to apply to taxable income in the years in
      which these temporary differences are expected to be recovered or settled.
      The
      effect on deferred tax assets and liabilities of a change in tax rates is
      recognized in income in the period that includes the enactment date. A valuation
      allowance is provided for deferred tax assets that are not expected to be
      recovered from future operations.





In
      tax
      year December 31, 2005, the Company operated as a partnership through May 20,
      2005 and as a "c" corporation for the period May 21, 2005 through December
      31,
      2005 and therefore was exempt from taxation; instead, its earnings and losses
      are included in the personal returns of the members and taxed depending on
      the
      individual's personal tax situation. The Company is the sole member of its
      two
      subsidiaries and consequently includes their activity in its return on a
      consolidated basis. The Company has a tax loss of approximately $941,005 which
      is available to reduce taxable income in future years. Use of the loss will
      expire in 2027.





Financial
      Instruments and Concentration of Credit Risk





The
      carrying amounts of the Company's financial assets and liabilities, including
      cash, accounts payable, and preferred shares with mandatory redemption at March
      31, 2007, approximate fair value because of the short maturity of these
      instruments. The carrying amount of the Company's notes payable approximates
      fair value at March 31, 2007, since the notes are at floating rates or fixed
      rates that approximate current market rates for notes with similar risks and
      maturities.





For
      the
      period ended March 31, 2006 100 percent of the Company's sales were to three
      homebuilders.








Preferred
      Shares subject to mandatory redemption





The
      features of our Series B Preferred Stock within SFAS 150 “Accounting for Certain
      Financial Instruments with Characteristics of both Liabilities and Equity”. Due
      to redemption features of the securities, the preferred shares are being
      classified as a liability in these financial statements. The securities give
      the
      holder the option of a net cash settlement or a settlement in common share
      based
      on a conversion rate. The settlement amount under SFAS 150 at March 31, 2007
      would have been approximately 584,769 shares at a average bid price of $ 1.106
      per share or $ 619,855.





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          9
          -*







**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**








New
      Accounting Standards





SFAS
      No.
      151, "Inventory Costs," is effective for fiscal years beginning after June
      15,
      2006. This statement amends the guidance in Accounting Research Bulletin ("ARB")
      No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal
      amounts of idle facility expense, freight, handling costs, and wasted material
      (spoilage). The adoption of SFAS 151 did not have a material impact on the
      Company's financial statements.





SFAS
      No.
      152, "Accounting for Real Estate Time-Sharing Transactions," is effective for
      fiscal years beginning after June 15, 2005. This statement amends SFAS No.
      66,
      Accounting for Sales of Real Estate, to reference the financial accounting
      and
      reporting guidance for real estate time-sharing transactions that is provided
      in
      American Institute of Certified Public Accountants Statement of Position 04-2,
      Accounting for Real Estate Time-Sharing Transactions. The adoption of SFAS
      No.
      152 did not have a material impact on the Company's


financial
      statements.





SFAS
      No.
      123(R), "Share-Based Payment," replaces SFAS No. 123, "Accounting for
      Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for
      Stock Issued to Employees." This statement requires that the compensation cost
      relating to share-based payment transactions be recognized in the financial
      statements. The Company is required to apply this statement in the first interim
      period that begins after December 15, 2005. The adoption of SFAS No. 123(R)
      did
      not have a material impact on the Company's financial.





SFAS
      No.
      153, "Exchanges of Non-monetary Assets" - an amendment of APB Opinion No. 29,
      is
      effective for fiscal years beginning after June 15, 2005. This statement
      addresses the measurement of exchange of non-monetary assets and eliminates
      the
      exception from fair-value measurement for non-monetary exchanges


of
      similar productive assets in paragraph 21(b) of APB Opinion No. 29, "Accounting
      for Non-monetary Transactions," and replaces it with an exception for exchanges
      that do not have commercial substance. The adoption of SFAS No. 153 did not
      have
      a material impact on the Company's financial statements.





FIN
      No.
      46(R) revised FIN No. 46, "Consolidation of Variable Interest Entities,"
      requiring the consolidation by a business of variable interest entities in
      which
      it is the primary beneficiary. The adoption of FIN No. 46 did not have an impact
      on the Company's financial statements.





The
      EITF reached a consensus on Issue No. 04-8, "The Effect of Contingently
      Convertible Debt on Diluted Earnings Per Share" ("EITF 04-8"), which addresses
      when the dilutive effect of contingently convertible debt instruments should
      be
      included in diluted earnings (loss) per share. EITF 04-8 is effective for
      reporting periods ending after December 15, 2004. The adoption of EITF 04-8
      did
      not have an impact on diluted earnings (loss) per share.





(2)
      Related Party Transactions





The
      Company conducts its operations in a building rented by an affiliate. During
      the
      three and six months ended March 31, 2007 and 2006, the Company recorded rent
      expense of $15,750, $15,000and $31,500 and $30,000, respectively. At March
      31,
      2007 the Company owed rent in the amount of $ 21,000, which is included in
      accounts payable.





The
      Company's affiliate pays certain expenses on its behalf. The Company reimburses
      these expenses paid on its behalf by the affiliate at actual cost. Overhead
      expenses and indirect labor incurred by the affiliate are allocated to the
      Company based on management-approved estimates of time and effort. The Company
      reviews the estimated rate from time-to-time.





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          10
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**








Indebtedness
      to related parties consisted of the following at March 31, 2007:





Note
                payable to Karen Duran, interest at 8.5%, principal and interest
                payable
                in annual installments of $17,000Total
                financing under the agreement is $200,000
            
            $
            191,000Note
                payable to Karen Duran, interest at 8.5%,
              principal
                and interest payable May 25,2007Total
                financing under the agreement is $150,000
            
            
            150,000Advances
                payable to shareholders, payable on demand
            
            
            107,032Advances
                payable to Falcon Ridge Development LLC, an affiliate, payable on
                demand
            
            
            638,274Accrued
                interest payable
            
            
            37,622$
            1,123,928








(3)
      Fixed
      Assets





Fixed
      assets consist of the following at March 31, 2007:





Cost
            
            Accumulated
                DepreciationSoftware
            
            $
            32,349
            
            $
            4,309Equipment
            
            
            7,981
            
            
            2,793$
            40,330
            
            $
            7,102





Depreciation
      expense is included in selling, general and administrative expenses in the
      accompanying financial statements. For the three and six months ended March
      31,
      2007 and 2006 the Company recorded depreciation expense of $1,577, $1,050 and
      $3,154 and $1,444 respectively.





(4)
      Real
      Estate Operations





The
      Company completed development of Sierra Norte I and II subdivisions in Rio
      Rancho, New Mexico in 2006. The Company is in the process of developing
      approximately 139 acres of raw land in the Belen, New Mexico referred to as
      "Spanish Trails." Spanish Trails consists of 139 acres of land platted into
      approximately 517 home sites. Home sites will be sold to different builders
      or
      developed by the Company.





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          11
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**








Real
      estate held for resale, consists of the following at March 31,
      2007:





Land
                acquisition costs
            
            $
            2,186,033Land
                development costs
            
            
            697,743Capitalized
                interest
            
            
            103,593$
            2,987,369





(5)
      Note
      Payable long term





Note
      payable consists of the following at March 31, 2007:





Note
                payable to Toby and Mary Ann Cordova, with interest at 6.5 percent,
                principal and interest payable in semi-annual installments of $21,862,
                collateralized by a real estate contract due 2-18-2019Total
                financing under the agreement is $435,000
            
            $
            360,483





Note
                payable to an individual, repayable with interest calculated at 10%
                per
                annum on the receipt of $ 5,000,000 from a private placement of securities
                or six months whichever comes first. The note may be extended for
                ninety
                days with the payment of a two percent renewal fee.Total
                financing under the agreement is $200,000
            
            200,000$
            560,483




Aggregate
      maturities required on long-term debt at March 31, 2007, are as
      follows:





Year
                ending March 31,2008
            
            $
            220,6242009
            
            
            21,9872010
            
            
            23,4392011
            
            
            24,9872012
                and thereafter
            
            
            269,446$
            560,483





*-
          12
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**


(6)
      Income Taxes





A
      reconciliation of U.S. statutory federal income tax rate to the effective rate
      follows for the period ended March 31, 2007:





U.S.
                statutory federal rate
            
            
            20.000
            %State
                income tax rate
            
            
            4.80
            %Net
                operating loss for which no tax benefit is currently
                available
            
            
            -24.800
            %0.00
            %





At
      March
      31, 2007, the Company has a net operating loss carry forward for federal income
      tax purposes of approximately $941,005, which was fully allowed for in the
      valuation allowance of $233,369. The valuation allowance offsets the net
      deferred tax asset for which there is no assurance of recovery. The change
      in
      the valuation allowance for the six month period ended March 31, 2007 is
      $173,328. The Company had no material temporary differences other than the
      net
      operating loss carry-forwards.





Because
      of various stock transactions during 2005, management believes the Company
      has
      undergone an "ownership change" as defined by Section 382 of the Internal
      Revenue Code. Accordingly, the utilization of a portion of the net operating
      loss carry forward may be limited. Due to this limitation, and the uncertainty
      regarding the ultimate utilization of the net operating loss carry forward,
      no
      tax benefit for losses has been provided by the Company in the accompanying
      financial statements. The net operating loss carry forward will expire in
      2027.





(7)
      Shareholders' Deficit





Preferred
      Stock





On
      July
      20, 2005, the Company established Series A Convertible Preferred Shares and
      authorized 400,000 shares. The preferences are as follows:





ཉ
            Shares
                are non-cumulative with a preference over common shares if and when
                a
                dividend is declared.





ཉ
            Shares
                are convertible into common stock at any time on the basis of 100
                common
                shares for 1 share of preferred stock. This conversion rate is subject
                to
                adjustments for forward or reverse splits or other capitalizations.
                The
                option was of no intrinsic benefit, at the commitment date, to the
                preferred shareholder.





*-
          13
          -*





**FALCON
      RIDGE DEVELOPMENT, INC.**





**Notes
      to Consolidated Financial Statements**


**(Unaudited)**





ཉ
            Shares
                have a priority over common shares upon
                liquidation.





ཉ
            Shares
                are callable at any time by the Company at the original purchase
                price.
                The Preferred Shareholders will have thirty days thereafter to convert
                to
                common stock.





8)  Preferred
      Shares subject to mandatory redemption





The
      features of our Series B Preferred Stock and determined that it falls within
      SFAS 150 “Accounting for Certain Financial Instruments with Characteristics of
      both Liabilities and Equity”. Due to redemption features of the securities, the
      preferred shares are being classified as a liability in these financial
      statements. The securities give the holder the option of a net cash settlement
      or a settlement in common share based on a conversion rate. The value of the
      liability is fixed at the stated value of $485,000. However, the number of
      common shares into which the preferred shares are convertible is inversely
      related to changes in the Company’s common stock. Although the potential
      conversion could conceivably require the Company to issue a number of shares
      in
      excess of its authorized limit, the Company does not believe that its liability
      recorded at March 31, 2007, associated with the Series B preferred stock is
      appropriate in that such obligation would not exceed the aggregate stated
      value.





On
      April
      15, the Company established Series B Convertible Preferred Shares and authorized
      400,000 shares. The preferences are as follows:





ཉ
            Shares
                are non-cumulative with a preference over common shares if and when
                a
                dividend is declared.





ཉ
            Investor
                will receive a dividend of 12% per annum payable monthly for a period
                of
                eighteen months from the date of
                purchase.





ཉ
            Shares
                are convertible into common stock at any time on the basis of 75%
                of the
                average current bid price for the preceding 20 days of the Company's
                receipt of notice to convert. This conversion rate is subject to
                adjustments for forward or reverse splits or other capitalizations.
                The
                option was of no intrinsic benefit, at the commitment date, to the
                preferred shareholder.





ཉ
            Shares
                have a priority over common shares upon
                liquidation.





ཉ
            Shares
                are callable by the Company at any time after 12 months of issuance
                of
                Preferred B shares at the original purchase price. The Preferred
                Shareholders will have sixty days thereafter to convert to common
                stock.
                The shares will be repurchased after eighteen months for the original
                issue price.






*-
          14
          -*





**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**








The
      following discussion of our financial condition and results of operations should
      be read in conjunction with, and is qualified in its entirety by, the
      consolidated financial statements and notes thereto included in Item 1 in this
      Quarterly Report on Form 10-QSB. This item contains forward-looking statements
      that involve risks and uncertainties. Actual results may differ materially
      from
      those indicated in such forward-looking statements.





Forward-Looking
      Statements





This
      Quarterly Report on Form 10-QSB and the documents incorporated herein by
      reference contain forward-looking statements that have been made pursuant to
      the
      provisions of the Private Securities Litigation Reform Act of 1995. Such
      forward-looking statements are based on current expectations, estimates, and
      projections about our industry, management beliefs, and certain assumptions
      made
      by our management. Words such as "anticipates," expects," "intends," "plans,"
      "believes," "seeks," "estimates," variations of such words, and similar
      expressions are intended to identify such forward-looking statements. These
      statements are not guarantees of future performance and are subject to certain
      risks, uncertainties, and assumptions that are difficult to predict; therefore,
      actual results may differ materially from those expressed or forecasted in
      any
      such forward-looking statements. Unless required by law, we undertake no
      obligation to update publicly any forward-looking statements, whether as a
      result of new information, future events, or otherwise. However, readers should
      carefully review the risk factors set forth in other reports and documents
      that
      we file from time to time with the Securities and Exchange Commission,
      particularly our Annual Reports on Form 10-KSB and any Current Reports on Form
      8-K.


Overview
      and History





We
      are a
      Nevada corporation with two subsidiaries, Sierra Norte, LLC ("Sierra Norte")
      and
      Spanish Trails, LLC ("Spanish Trails"). We are in the real estate industry
      and
      acquire tracts of raw land and develop them into residential lots for sale
      to
      homebuilders. We plan to expand our operations in 2007 into homebuilding on
      our
      Spanish Trails lots. Our executive offices are located in the Albuquerque,
      New
      Mexico area.





On
      May
      20, 2005, we completed a reverse acquisition transaction. We acquired Sierra
      Norte, a New Mexico limited liability company, which thereby became our
      wholly-owned subsidiary. Sierra Norte is a land development company in the
      Albuquerque, New Mexico area. Formerly we were a technology company which was
      in
      the business of developing and marketing color comparison devices. We acquired
      Spanish Trails on July 6, 2005 as discussed below.





As
      a
      result of the Sierra Norte acquisition, the former security holders of Sierra
      Norte acquired a majority of our outstanding shares of common stock. For
      accounting purposes, Sierra Norte has been deemed to be the acquirer in the
      acquisition and, consequently, the assets, liabilities and historical operations
      that are reflected in our financial statements are those of Sierra Norte, which
      are recorded at the historical cost basis of Sierra Norte. The reverse
      acquisition was consummated under Colorado law pursuant to an Agreement and
      Plan
      of Reorganization dated May 20, 2005.





On
      July
      6, 2005, we entered into an exchange of securities whereby we acquired 100%
      of
      the ownership of Spanish Trails, in exchange for the issuance of a total of
      614,882,069 (pre-reverse split) of our common shares. As a result of the Spanish
      Trails acquisition, the former security holders of Spanish Trails acquired
      a
      majority of our outstanding shares of common stock, but we did not have a change
      of control because the owners of a majority of Spanish Trails were the executive
      officers and majority shareholders of the Company. After the exchange,
      752,262,441 (pre-reverse split) shares of common stock were issued and
      outstanding.





Also,
      on
      July 6, 2005 we reincorporated our company to Nevada from Colorado and changed
      our name to Falcon Ridge Development Inc., after shareholder approval. In
      connection with the name change, we changed to a new trading symbol,
      FLRD.BB.





On
      August
      10 we affected a 1 for 200 reverse split of our common stock. This reduced
      the
      authorized capital form 900,000,000 common shares to 4,500,000 common shares
      and
      the outstanding common shares from 752,262,441 to 3,761,233. We changed our
      trading symbol to FCNR.BB.


*-
          15
          -*








Our
      Spanish Trails project is progressing through local real estate governmental
      clearance toward final approval of our platting plan. We anticipate the process
      should be completed by mid-2007. When our platting plan receives final approval,
      we will be able to begin construction of the first phase of development of
      approximately 517 lots for single family homes. Considerable up front costs
      in
      any real estate platting project must first be incurred and paid for, thus
      in
      the early stages of our real estate projects significant amounts of capital
      can
      be required until platting occurs, and lots are improved and sold. Predictably,
      greater revenues will be achieved as soon as a portion of the lots are improved
      and sold. When the lot development has been completed and accepted by the
      Valencia County, New Mexico, engineers and construction of the lots completed,
      the sale of those lots will be funded and closed. It is also our intention
      to
      initiate a home building division on some of the remaining developed Spanish
      Trails project lots not sold to homebuilders. We expect to have initial models
      open in the Spring of 2008. The sale of homes and, consequently, the pace of
      construction, will be determined by the rate of market absorption.





Results
      of Operations





Three
      and Six Months Ended March 31,2007 Compared to 2006





We
      had no
      revenue for the three and six months ended March 31, 2007 compared to revenues
      of $643,969 for the three and six months ended March 31, 2006. This decrease
      was
      primarily attributable to our lack of project funding. In 2005, we had completed
      and sold out the Sierra Norte development.





Our
      costs
      of sales for the three and six months ended March 31, 2007 was $ 0 compared
      to
      costs of sales of $689,730 for the three and six months March 31, 2006. This
      decrease is due to having no lot sales in 2006. Our selling, general and
      administrative expenses for the three and six months ended March 31, 2007 were
      $544,971 and $153,934, compared to selling, general and administrative expenses
      of $ 92,778 and $350,130 for the three and six months ended March 31, 2006.
      The
      significant increase in the three months ended March 31, 2007 was caused
      primarily by compensation for construction and mortgage consulting in the amount
      of $ 369,800. Other major components of these expenses are salaries, payroll
      taxes and professional fees. We have reduced payroll in periods after March
      31,
      2006. We expect to increase our staff in the near future as development activity
      picks up.





Due
      primarily to increased lack of lot sales and increased general and
      administrative expenses as a result of being a public company, we incurred
      a
      loss of $ $544,971 or $0.00 per share and $698,905, or $0.00 per share, for
      the
      three and six months ended March 31, 2007 compared to a loss of $92,778 or
      $0.00
      per share and $350,130, or $0.00 per share, for the three and six months ended
      March 31, 2006.





Our
      principal source of revenue in the near term is expected to be from 139 acres
      of
      land we own in the Spanish Trails project, which is being developed as discussed
      above. In this development, we plan to be a homebuilder as well as a land
      developer. The timeframe over which developed lots and /or homes will be sold
      may be several years. We have made deposits on additional in Oregon land that
      may be developed if the necessary capital and/ or financing becomes available.





Liquidity
      and Capital Resources





At
      March
      31, 2007 our cash position was $345.





Our
      net
      cash used in operating activities was $335,867 for the six months ended March
      31, 2007, compared to net cash used by operating activities of $919,122 for
      the
      six months ended March 31, 2006.





Our
      net
      cash used by investing activities was $ 0 for the six months ended March 31,
      2007, compared to $32,349 of net cash used by investing activities for the
      six
      months ended March 31, 2006.





15


Our
      net
      cash provided by financing activities was $332,458 for the six months ended
      March 31, 2007, compared to $638,242 of net cash provided by financing
      activities for the six months ended March 31, 2006.


*-
          16
          -*





From
      time
      to time we need working capital when we do not have funds to pay for lot
      development or general and administrative expenses. During the six months ended
      March 31, 2007, our chief financial officer, chief executive officer and Falcon
      Ridge Development LLC (a related party) have loaned us funds for us to meet
      our
      some of our obligations and to continue working on platting and preparing lots
      for home building. We cannot assure that such funding will be available in
      the
      future. In December we secured $200, 000 in bridge financing which has helped
      us
      with our working capital needs and allowed us time to continue seeking
      additional capital and other financing allowing us to continue our Spanish
      Trails project.





The
      timing of the completion of the platting of our Spanish Trails project is not
      certain, so we cannot assure the timing of cash flow from lot sales. Thus,
      we
      may be faced with a working capital shortage. In that event we may be required
      to seek financing which may not be available or, if available, it could be
      on
      terms which are cost prohibitive to us.





In
      addition, we now expect to begin building homes on our Spanish Trails project
      in
      mid 2008. This initiative will require working capital which we cannot assure
      will be available. We are pursuing debt financing for this
      endeavor.





Most
      of
      our costs are incurred in the initial phases of our real estate projects. Our
      profitability depends upon our ability to develop, manage and sell real estate
      projects on a timely basis and to control our costs. We expect that we will
      develop a more consistent pipeline of activity as we mature and, thereby, a
      more
      consistent source of revenues and profit. If we succeed in this effort and
      generate sufficient revenues, we will expect to be profitable. However, we
      cannot assure that we will be profitable.





We
      do not
      intend to pay dividends for the foreseeable future. We do not expect our
      revenues to be impacted by seasonal demands.





Recently
      Issued Accounting Pronouncements





We
      do not
      expect the adoption of any recently issued accounting pronouncements to have
      a
      significant impact on our net results of operations, financial position, or
      cash
      flows.





Critical
      Accounting Policies





The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires us to
      make a number of estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements. Such estimates and assumptions affect
      the
      reported amounts of revenues and expenses during the reporting period. On an
      ongoing basis, we evaluate estimates and assumptions based upon historical
      experience and various other factors and circumstances. We believe our estimates
      and assumptions are reasonable in the circumstances; however, actual results
      may
      differ from these estimates under different future


conditions.





We
      believe that the estimates and assumptions that are most important to the
      portrayal of our financial condition and results of operations, in that they
      require our most difficult, subjective or complex judgments, form the basis
      for
      the accounting policies deemed to be most critical to us. These critical
      accounting policies relate to bad debts, impairment of intangible assets and
      long lived assets, contractual adjustments to revenue, and contingencies and
      litigation. We believe estimates and assumptions related to these critical
      accounting policies are appropriate under the circumstances; however, should
      future events or occurrences result in unanticipated consequences, there could
      impact on our future financial conditions or results of operations.







*-
          17
          -*





**ITEM
      3. CONTROLS AND PROCEDURES**





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting. As of the end of the period covered by this report, our
      chief executive officer and our chief financial officer evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures pursuant to Rule 13a-15b under the Securities Exchange Act of 1934.
      Based on their review of our disclosure controls and procedures, they have
      concluded that our disclosure controls and procedures are effective in timely
      alerting each of them to material information relating to us that is required
      to
      be included in our periodic SEC filings. Since our Company has been acquired
      as
      a result of the Sierra Norte acquisition discussed above, and a new board and
      management has been installed, we have been able to timely file our Form 10-QSBs
      and our Form 8-Ks. Management is in the continuing process of analyzing and
      adopting new policies and procedures to improve the design and operations of
      our
      disclosure controls, We acknowledge that a change with respect to financial
      controls has been made to alert us with respect to funding provided by related
      parties and that the changes in disclosure controls, particularly recognizing
      Form 8-K events, are ongoing. We expect these changes in internal controls
      will
      have a significant effect on our disclosure controls after the evaluation date
      and the date of this report.





Changes
      to Internal Controls include a reorganization of available staff to better
      segregate duties, acquisition and implementation of more sophisticated
      accounting software and a personnel plan to hire additional accounting and
      administrative staff. We continue to schedule training for employees and
      management in critical areas to enhance their ability to perform the duties
      assigned to them.












**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





There
      are
      no legal proceedings, to which we are a party, which could have a material
      adverse effect on our business, financial condition or operating results.
      However, a former attorney has filed a complaint and obtained a default
      judgement against us for fees and costs in the approximate amount of $ 47,000.
      We believe that the judgement will be reversed and we will enter arbitration
      with the attorney. We have included $ 38,000 in these financial statements
      and
      the costs assessed by the attorney of approximately $ 9,000 are not included.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.**





None





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.








**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None





**ITEM
      5. OTHER INFORMATION**





None





*-
          18
          -*





**ITEM
      6. EXHIBITS AND REPORTS ON FORM 8-K**





a.
      Exhibits





**Exhibit**
              **No.**
            
            **Description**2.1
            
            Agreement
                and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra
                Norte LLC (a)2.2
            
            Acquisition
                Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC
                (b)3.1
            
            Articles
                of Incorporation of Falcon Ridge Development, Inc. previously
                filed.3.2
            
            Bylaws
                of Falcon Ridge Development, Inc. previously filed.3.3
            
            Articles
                of Organization of Sierra Norte, LLC previously filed.3.4
            
            Operating
                Agreement of Sierra Norte, LLC previously filed.3.5
            
            Articles
                of Organization of Spanish Trails, LLC previously
                filed.3.6
            
            Operating
                Agreement of Spanish Trails, LLC previously filed.4.1
            
            Articles
                of Amendment - Establishment of Series of Preferred Stock previously
                filed.10.1
            
            Purchase
                Agreement - Spanish Trails, LLC and D.R. Horton* (Confidential portions
                of
                this agreement noted by *** have been omitted and filed separately
                with
                the Securities and Exchange Commission pursuant to a request for
                confidentiality under Rule 24b-2 of the Securities Exchange Act of
                1934.)
                Previously filed.10.2
            
            Promissory
                Note - Karen Y. Duran - Sierra Norte, LLC - May 20, 2006 - $150,000
                previously filed.10.3
            
            Promissory
                Note - Karen Y. Duran - Sierra Norte, LLC - June 1, 2006 - $200,000
                previously filed.10.4
            
            Promissory
                Note - Karen Y. Duran - Sierra Norte, LLC - June 19, 2006 - $66,000
                previously filed.14.1
            
            Code
                of Ethics previously filed.21.1
            
            List
                of Subsidiaries previously filed.23.1
            
            Consents
                of experts31.1
            
            Certification
                of Chief Executive Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)*31.2
            
            Certification
                of Chief Financial Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)*32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002*32.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002*99
            
            Additional
                Exhibits - None




______________





*
      Filed
      herewith.





(a)
            Filed
                on May 25, 2006 as Exhibit 2.1 with the Registrant's Current Report
                on
                Form 8-K and incorporated herein by
                reference.





(b)
            Filed
                on July 8, 2006 as Exhibit 10.19 with the Registrant's Current Report
                on
                Form 8-K and incorporated herein by
                reference.








b.
            Reports
                on Form 8-K







*-
          19
          -*







**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.














Falcon
                Ridge Development, Inc.Dated:
                May 2, 2007
            By:
            /s/
                Fred M. MontanoFred
                M. MontanoPresident,
                Chief Executive Officer, and DirectorDated:
                May 2, 2007
            By:
            /s/
                Karen Y. DuranKaren
                Y. DuranVice
                President, Treasurer and Chief Financial Officer





*-
          20
          -*








**EXHIBIT
      INDEX**










**Exhibit**
              **No.**
            
            **Description**2.1
            
            Agreement
                and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra
                Norte LLC (a)2.2
            
            Acquisition
                Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC
                (b)3.1
            
            Articles
                of Incorporation of Falcon Ridge Development, Inc. previously
                filed.3.2
            
            Bylaws
                of Falcon Ridge Development, Inc. previously filed.3.3
            
            Articles
                of Organization of Sierra Norte, LLC previously filed.3.4
            
            Operating
                Agreement of Sierra Norte, LLC previously filed.3.5
            
            Articles
                of Organization of Spanish Trails, LLC previously
                filed.3.6
            
            Operating
                Agreement of Spanish Trails, LLC previously filed.4.1
            
            Articles
                of Amendment - Establishment of Series of Preferred Stock previously
                filed.10.1
            
            Purchase
                Agreement - Spanish Trails, LLC and D.R. Horton* (Confidential portions
                of
                this agreement noted by *** have been omitted and filed separately
                with
                the Securities and Exchange Commission pursuant to a request for
                confidentiality under Rule 24b-2 of the Securities Exchange Act of
                1934.)
                Previously filed.10.2
            
            Promissory
                Note - Karen Y. Duran - Sierra Norte, LLC - May 20, 2006 - $150,000
                previously filed.10.3
            
            Promissory
                Note - Karen Y. Duran - Sierra Norte, LLC - June 1, 2006 - $200,000
                previously filed.10.4
            
            Promissory
                Note - Karen Y. Duran - Sierra Norte, LLC - June 19, 2006 - $66,000
                previously filed.14.1
            
            Code
                of Ethics previously filed.21.1
            
            List
                of Subsidiaries previously filed.23.1
            
            Consents
                of experts31.1
            
            Certification
                of Chief Executive Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)*31.2
            
            Certification
                of Chief Financial Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)*32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002*32.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002*99
            
            Additional
                Exhibits - None








___________________





*
      Filed
      herewith.





(a)
      Filed
      on May 25, 2006 as Exhibit 2.1 with the Registrant's Current Report on Form
      8-K
      and incorporated herein by reference.





(b)
      Filed
      on July 8, 2006 as Exhibit 10.19 with the Registrant's Current Report on Form
      8-K and incorporated herein by reference.







*-
          21
          -*